Fast-growing Squarespace, a competitor to blogging platforms such as WordPress and TypePad, recently announced it has taken its first institutional money – a $38.5 million growth investment led by Index Ventures and Accel Partners. The deal values the company between $80 million and $100 million, according to a knowledgeable source.

The New York-based company landed on the Inc. 500 last year, coming in at No. 339. Inc. magazine reported that the eight-employee company had grown its revenue from just under $270,000 in 2005 to $2.2 million in 2008.

If there were a website development tool for dummies, Squarespace would be it. Take a look at the demo on its website. Pretty slick stuff. The company says its hosted service is used by “tens of thousands of websites” worldwide and that its customer list includes fashion designer Marc Ecko, PR powerhouse Porter Novelli, TV journalist Bob Woodruff, ABC News Radio, actor Kevin Pollak and shock jock Don Imus.

Squarespace was founded in 2003 by then 21-year-old Anthony Casalena, who reportedly financed the startup with $20,000 from his dad. Casalena remains the company’s largest shareholder. As part of the minority investment from Index and Accel, Squarespace has formed a board that includes Dominique Vidal of Index Ventures, Andrew Braccia of Accel and Jonathan Klein, founder and CEO of Getty Images.

The Squarespace investment was made from Accel’s $480 million growth fund, a 2-year-old vehicle headed by Partner Ryan Sweeney. “This is actually our 7th growth investment, with another coming soon (stay tuned),” Sweeney wrote in an email to peHUB.

Sweeney declined to reveal the names of the other companies backed by the growth fund. At least two others are group purchasing website Groupon, which raised $135 million from Accel, Battery, NEA, DST and Bristol Ventures in June; and hipster apparel website ModCloth, which raised nearly $20 million from Accel, First Round Capital and Floodgate in May.

As to how much capital the growth fund has left, Sweeney wouldn’t say. “It’s too early to tell when we will back to market,” he wrote. “We still have ample capital in the current fund left to deploy in great businesses.”

The Squarespace investment fits into one of Accel’s thesis that business software is becoming increasingly consumerized.

With regard to Squarespace, Sweeney says the company “offers the best Web publishing products that my partner, Andrew Braccia, and I have seen – providing a professional, high-quality publishing platform with an extensive feature set that includes social networking integration, hand designed templates, management through an iPhone app, and powerful analytics.”

Oh, and it doesn’t hurt that “the company has also been growing quickly, more than 100 percent year over year, is profitable, and currently serves billions of hits per month,” Sweeney notes.